March 29, 2017, posted by Kevin Smith
Ad Math: Calculating Marketing Cost Per Unit
When you don’t have deep pockets, every dollar in your marketing budget counts and you need to allocate your money as effectively as possible. That’s why it’s helpful to know your marketing cost per unit.
After all, the way that we – and our marketing efforts – are ultimately judged is by how many units of a product or service we’ve sold in a given period.
And while we often look at how much we’re spending per customer or per channel, it’s important to also understand how much your spending in marketing per unit.
To determine how your marketing is performing, your cost per unit should decline as a product or service matures. This is due to the fact that as more people buy, your share of voice and any earned media should increase, effectively lowering your overall marketing costs. This doesn’t mean that you should stop marketing, but rather that you may want to pay more attention to new channels or segments.
However, if your marketing cost per unit increases over time that should serve as a strong signal that something isn’t working – either your marketing is off target or using the wrong channels, or your customers are beginning to lose interest.
We hope this video helped. If so, please take a moment to like, comment, and subscribe to our channel where we’ll add a new Ad Math video each week.
And, if you have some marketing metrics that you’d like address in an upcoming video let us know by adding it in the comments.